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Frontier sticks to its rural roots - Sizing up ILEC M&A activity

Frontier may be one of most elusive ILECs out there from a press perspective, but it's been quite active on the M&A front. In May, Frontier announced it would acquire 4.8 million access lines in rural markets in 14 states from Verizon for about $5.25 billion in stock. This deal, which followed the mega CenturyTel/Embarq merger, is arguably one of the largest deals to take place in the consolidation of the rural telco market. Indeed. With the Verizon acquisition, Frontier will become the fifth largest U.S. telco and the largest rural carrier overall with more than 7 million access lines in 27 states.

Obviously, telecom industry pundits will be closely watching how Frontier will be able to integrate Verizon's operations into its fold and then continue to serve those customers and its existing ones. But in talking with Vince Vittore, senior analyst at the Yankee group, the bigger battle for Frontier may be the cable MSO. "The big challenge for them in the Verizon asset acquisition will be fending off cable in those markets. The fact that they picked up a handful of FiOS assets is clearly positive but in those non-FiOS markets they could have a fight on their hands." New advances in expanding bandwidth over existing coax via DOCSIS 3.0 mean cable will strike business and residential customers with aggressive pricing campaigns and packages that Frontier will need to stay on top of or get left behind the competitive curve.

Frontier sticks to its rural roots - Sizing up ILEC M&A activity

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